Barbecue summer and royal baby give High Street a boost

Thursday 15 August 2013 11:26 BST

Britons splashed out on food and drink in July as they basked in the feel-good factor of a summer heatwave and the royal birth, official figures revealed today.

Retail sales volumes surged by a far stronger-than-expected 1.1% last month, the third consecutive rise in month-on-month sales, as the better weather lifted spirits and encouraged people to open their wallets, the Office for National Statistics said.

Food purchases were 2.1% higher than last year, the biggest rise since the wedding of Prince William and Kate Middleton in April 2011. Families also snapped up more barbecue goods and other outdoor products as Britons were cheered by sporting successes including Andy Murray’s Wimbledon victory, Lions rugby and Ashes cricket.

The 1.8% overall rise in quarterly sales volumes was the highest since March 2004, adding to the positive news on Britain’s economic recovery after growth accelerated to 0.6% between April and June.

Markit chief economist Chris Williamson said: “Given the combination of these retail numbers and buoyant business surveys, we could easily see the economy maintain its 0.6% pace into the third quarter or even accelerate.Shopping was most likely buoyed by the feelgood factor of the birth of the royal baby and Murray’s Wimbledon win, but it was the heatwave which was the most important in terms of boosting sales of outdoor goods, summer clothing, food and alcohol.”

Sales at department stores surged 3.1% in July on a year earlier while sales of textiles, clothing and footwear were up 1.4%. Supermarkets also reported higher sales of garden furniture although household goods stores were a rare weak spot, with sales falling 2.3% on a year earlier.

Higher house prices are also boosting economic optimism, spiralling by 8.1% year-on-year in London. But Centre for Economics and Business Research economist Daniel Solomon warned that the nascent recovery could soon run out of steam as long as wages — growing at an average rate of 1.1% — are behind inflation, currently at 2.8%.

He said: “The rate at which wages are increasing is still far below the rate of inflation. This implies that households’ real buying power is still falling. Until wage growth picks up or inflation comes down, falling real earnings could act as a fundamental constraint on the retail sector.”